Inflation is showing no signs of stopping. In April, retail inflation surged to an eight-year high of 7.79 per cent. It was 6.95 per cent in March 2022 and 4.23 per cent in April 2021. This is the fourth consecutive month that the retail inflation (CPI) has been above the Reserve Bank of India (RBI)-mandated ceiling of 6 per cent.
According to the figures released by the Ministry of Statistics and Programme Implementation (MOSPI), food items have a big role to play in the increase in retail inflation. Inflation in the food basket rose to 8.38 per cent in April from 7.68 per cent in March. It stood at mere 1.96 per cent a year ago.
The prices of almost everything in the food basket have increased. Edible oil prices went up in April by 17.28 per cent. Besides, there has been a rise of 15.41 per cent in vegetable prices, 10.56 per cent in spices and 6.97 per cent in meat and fish. The prices of prepared meals, snacks, sweets etc. have gone up by 7.10 per cent. Cereals and their products have become dearer by 5.96 per cent while milk and its products have witnessed an increase of 5.47 per cent.
The figures also reveal that inflation in villages is greater than that in towns and cities. While the urban retail inflation rate was 7.09 per cent, the rate for rural areas went up to 8.38 per cent. Food may be produced in villages, but its inflation is higher there. Food inflation was 8.50 per cent in rural areas and 8.09 per cent in urban areas. In April 2021, food inflation in rural areas was 1.31 per cent while that in urban ones was 3.15 per cent.
Besides food items, the prices in other segments have also gone up. The prices in the ‘fuel and light’ category went up by 10.80 per cent. Clothing and footwear prices have registered an increase of 9.85 per cent while housing prices have gone up by 3.47 per cent.
RBI mainly considers the retail inflation figure while preparing the monetary policy. The Monetary Policy Committee (MPC) meeting is usually held every two months, but last week it held an off-cycle meeting and increased the repo rate by 40 basis points (bps) to 4.40 per cent. In view of the constantly increasing inflation, an increase in the repo rate is expected in its next meeting, too. The repo rate is the rate at which RBI lends money to commercial banks. RBI Governor Shaktikanta Das said last week that the aim of increasing the repo rate was to rein in inflation.